Natasha went to three car dealerships to check the prices of the same Ford two-door coupe. The city where the dealerships are located has a sales tax of 5% and a license fee of 2%. All dealerships offer extended warranties that are 3 years/70,000 miles. Use the following information gathered by Natasha to answer exercise.
Dealership 1—Ford Coupe | Dealership 2—Ford Coupe | Dealership 3—Ford Coupe |
• $24,999 plus $2000 rebate | • $23,799; dealer pays sales tax | • $23,999 |
• extended warranty $1350 | • extended warranty $1450 | • free extended warranty |
(a) Which dealership offers the most expensive purchase price? State this amount.
(b) Each dealership offers a different interest rate on a 48-month loan without a down payment, resulting in the following monthly payments:
Dealership 1
Dealership 2
Dealership 3
$589.27/month
$594.07/month
$603.07/month
From which dealership should Natasha buy the Ford coupe so that the total cost of the car is the most expensive? State this amount.
(c) Compare the results of parts (a) and (b). What conclusion can you make?
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